How to Complete a Cost Forecast using PM Cost Projections
Before you start
In order to complete an accurate forecast, it is important that the cost inputs are complete and inclusive of all known actual and committed costs incurred by the project on the date of the forecast.
To ensure that the costs recorded in Viewpoint are accurate, it is important to understand and pay attention to accounting cut off dates on the finance calendar and ensure that payables are reviewed prior to the monthly deadline. It is also important to stay on top of processing paperwork such as owner change orders, subcontract change orders, and vendor purchase orders as soon as practical as these alter the financial position of the project and will reflect on the final output of your cost forecast.
Start forecasting no sooner than PM start date on finance calendar
Synergy Projects publishes a finance calendar for the year that details all of the important cut-off dates for financial activities within the organization. Each month a specific date is identified that marks the start of the forecasting period for that month. Do NOT start your monthly forecast prior to this date, as this ensures that all accounting functions leading up to forecast (vendor payables, subcontract payables, payroll, etc.) have been completed and batches have been closed. If you begin your forecast ahead of the start date, you risk not having complete cost information posted to Viewpoint which reduces the accuracy of the forecast.
Keep up to date with payable approvals and progress invoices
The finance calendar also identifies dates for approving vendor invoice payables, for submitting personal expenses, and for submitting monthly progress claims to owners. It is critical that these functions remain up to date and that due dates for these activities are enforced. Respecting the cut-off dates for these activities ensures that the costs and revenues are captured in the correct month leading to forecast accuracy and smooth functioning of the business overall.
Ensure all owner changes have been processed in Viewpoint
Owner change orders that alter the contract value of the prime contract have an impact on the financial forecast of the project as they change the expected revenue, costs, and fee for the project. These change orders are only known to the accounting team when they are processed by the project manager, or delegate, for the project and as as result are not included in any financial reporting or calendars. It is critical that change orders be processed as soon as approval is received, including issuing change orders to subcontractors and purchase orders to vendors. Remember to interface approved changes, and cost commitments after they are made so that they reflect on your project reports.
Ensure all cost commitments have been completed and interfaced
Subcontracts generally make up 80%+ of the total value of the prime contract with the owner. For a project forecast or project cost report to be reliable, it is important that subcontract values be constantly up to date in Viewpoint. Once subcontract terms have been negotiated with the trade contractor, the terms should be formally documented in a subcontract in Viewpoint, issued to the subcontractor for signature, and interfaced to record the committed costs on the project.
Similarly, when a subcontractor change order is required - either as the result of an approved change order from the owner, or as a result of an internal change issued to the subcontractor for a change in their scope - it is important that subcontractor change orders be issued promptly and interfaced in Viewpoint.
Purchase Orders (POs) represent the last form of cost commitment that needs to be accounted for when preparing for your forecasts. Ensure that all verbal orders placed with suppliers have been captured with written purchase orders and that these POs have been entered and interfaced in Viewpoint.
Keeping up to date with subcontracts, subcontract change orders, and purchase orders ensures that cost commitments are accurately captured and reflected in reports, leading to a more informed and accurate project forecast.
Create projection codes
The last step before starting on the project forecast is to create projection codes. You should complete these step each month prior to starting a new forecast to ensure that any phase codes or cost types opened since the last forecast period have been captured. For more information on how to create projection codes, see the Creating Projection Codes article.
Creating a cost projection
Initializing a new projection
To start a new forecast, open the PM Cost Projections program inside the Project Management module in Viewpoint. This will open a blank cost projection screen. Enter the projection date by clicking the calendar button next to the projection date to open a calendar and choose a data, or you can type it manually as MM/DD/YY. Then enter your project number by hitting F4 and choosing from the project list, or by typing the number in manually.
Once you have entered both a projection data and project number, a dialog window will open with options for how to handle Plugged Values. Choose the first option ("Never") and click the Initialize button to populate the cost projection grid.
HINT: If you have previously started a forecast and want to pick up where you left off - hit the F4 key while in the Projection Date box to bring up a list of all open cost projections that are associated with you.
Forecasting phase codes in Viewpoint
Once your project has been set up with projection codes based on phase codes (for more information how to do this - see the Creating Projection Codes article), you are able to go line by line through each phase code of your project and provide an estimate of the final financial position of each line. Once complete, the sum of each of these lines adds up to the total project cost forecast.
Viewpoint's forecasting module is flexible in that you can forecast each individual line using one of the following methods:
- Percent Complete Cost
- Remaining Cost
- Projected Final Cost
- Over / Under Cost
- Percent Complete Hours
- Remaining Hours
- Projected Final Hours
- Over / Under Hours
Note: In order to be able to forecast based on hours, the phase code requires an budget of the number of hours required to complete the task which occurs during the estimate upload step. If you did not set up your project with hours on labour phase codes, you will not be able to forecast using hours and will need to forecast using costs.
When you update any one of the fields, Viewpoint will automatically calculate the impact on the other columns in the same row. For example, changing Percent Complete Cost will result in Viewpoint automatically updating the Remaining Cost, Projected Final Cost, and Over / Under Costs to reflect the change, as well as the equivalent hour columns if you have set up your phase codes with hours.
To complete the forecast in Viewpoint, you can work through each phase code on your project from the first to last. Determine the final value for each line and update the column most relevant to your calculation. Hitting the enter key while in the cell, or navigating out of the cell will recalculate all other columns in the same row and save changes. Lines that have been edited will highlight in yellow to help you keep track of your progress (sometimes it will not highlight immediately and you may need to close and reopen the PM Cost Projections program to see changes).
For a detailed guide on how to forecast accurately using Viewpoint, see the Forecasting Phase Codes Detailed Guide article.
Forecast cover page
Sanity check
Submitting your Forecast
Tips and Tricks
Viewpoint Forecasting Terminology
Viewpoint has a set of terminology used inside the application that relates to costing and forecasting. Some of the terminology used within the Viewpoint software is different that the terms we use day-to-day at Synergy to describe the same thing. Here is a list of terms used in Viewpoint, their meanings within the application, and an equivalent synonym that you may hear at the office
- Cost Projection - This refers to the estimate of final costs for a project. A cost projection is completed for a specific date and a specific project. We often refer to this as a forecast, a project forecast, or a cost forecast.
- Plugged Values - This refers to any value on a projection code that has been manually changed by a human user. Viewpoint will automatically generate estimates for forecast values , and when you overwrite one of these automatically generated values with a manual input you have created a plugged value.